The scandal hanging over Ursula von der Leyen
Critics allege cronyism played role in award of contracts
worth millions by German defense ministry.
By JANOSCH
DELCKER 7/15/19, 4:01 AM CET
The first time the public heard about the scandal was in the
fall of 2018, when internal reports by Germany’s Federal Audit Office were
leaked to the media | Tobias Schwarz/AFP via Getty Images
BERLIN — Ursula von der Leyen is planning a new career as
European Commission chief in Brussels, but the German defense minister still
has questions to answer back home.
An investigative committee of the German parliament — the
toughest instrument that lawmakers can use to probe government misdeeds — is
digging into how lucrative contracts from her ministry were awarded to outside
consultants without proper oversight, and whether a network of informal
personal connections facilitated those deals.
And the lawmakers looking into the case say von der Leyen
will still have to face their questions even if she is confirmed as Commission
president in a vote in the European Parliament on Tuesday.
“Whatever job Ms. von der Leyen has in the future won't
change in any way the fact that the committee will subpoena and question her,”
said Tobias Lindner, a member of parliament and the security policy
spokesperson for the Greens opposition party.
“What happened in the past in the defense ministry under her
leadership happened — and we will get to the bottom of that.”
The auditors’ main criticism wasn't that the ministry paid
for outside expertise. Rather, it was about the way contracts were awarded.
Von der Leyen and her ministry declined requests for
interviews for this story. Last November, she told the German parliament there
had been “mistakes” in how external consultants were hired and said "this
never should have happened." But she defended the use of such consultants,
saying they had been required to undertake a huge overhaul of the ministry.
Von der Leyen blamed the problems on a mixture of
negligence, corner-cutting and mistakes by individuals overwhelmed by their
work. But others have put forward a less innocent explanation — that some
consultants had privileged access to ministry officials that helped them
circumvent rules and win contracts worth millions of euros.
Although there is no suggestion that von der Leyen herself
was part of this network, the increased use of external consultants has been a
hallmark of her tenure as defense minister.
Interviews with members of the investigative committee,
witness testimony and documents obtained by POLITICO all suggest external
consultants have been able to gain growing influence on the inner workings of
the defense ministry during the five and a half years that von der Leyen has
been in charge.
When von der Leyen faces the committee, she will likely also
face questions about an internal inquiry by her ministry into the affair | Odd
Andersen/AFP via Getty Images
“From the beginning it was Ms. von der Leyen’s desire and
political intention that external consultants would gain influence,” said
Matthias Höhn, a member of parliament and the spokesperson on security policy
for the left-wing Die Linke party.
When von der Leyen faces the committee, she will likely also
face questions about an internal inquiry by her ministry into the affair. In
that investigation, “central questions weren’t asked, suspicions weren’t
followed up,” said Dennis Rohde, a member of parliament for the center-left
Social Democrats (SPD).
"All of this, if you ask me, was a crude attempt to
distract from misconduct and cover up for people among the leadership,” Rohde
added.
Criticism of the ministry over the scandal has come from
multiple opposition parties and the SPD, the junior partner in Germany's coalition
government. Members of von der Leyen's conservative camp have backed her and
the ministry but even some of them have been less than full-throated in their
defense.
Here’s the lowdown on what's become known as the
Berateraffäre (consultant scandal):
The scandal
The first time the public heard about the scandal was in the
fall of 2018, when internal reports by Germany’s Federal Audit Office were
leaked to the media.
The watchdog, which monitors German government cashflows,
described dozens of irregularities in the hiring of external consultants by von
der Leyen's defense ministry.
Those consultants played a more significant role than the
ministry had publicly claimed, several media reports said: In 2015, for
example, auditors estimated that the ministry had spent up to €100 million on
external consultants, but only officially declared €2.2 million for the
purpose. A year later, the ministry had spent up to €150 million on advisers
while declaring only €2.9 million.
The auditors’ main criticism wasn't that the ministry paid
for outside expertise — which security experts say is needed, particularly when
it comes to applying new digital technologies. Rather, it was about the way
contracts were awarded.
After news of the scandal broke, von der Leyen's ministry
promised measures to prevent further mistakes.
Analyzing 56 out of 375 contracts awarded to consultants
during the years 2015 and 2016, the Federal Audit Office found that in the vast
majority of cases, the defense ministry did not provide sufficient justification
for deciding that external advice was needed; in more than a third of the
cases, procedures did not follow the normal rules for awarding contracts.
For example, consultants for a project called “Product
Lifecycle Management (PLM)" — examining how best to analyse and use data
from the A400M transport aircraft — were
hired using an umbrella IT contract set up for a completely unrelated purpose,
circumventing the regular procedure for awarding contracts.
After news of the scandal broke, von der Leyen's ministry
promised measures to prevent further mistakes. But after some high-ranking
officials refused to talk to parliamentarians, opposition lawmakers joined
together in December to force the establishment of the investigative committee
that would allow them to subpoena witnesses.
The ministry
When von der Leyen took over the defense ministry back in
December 2013, Germany’s armed forces were a shambles. Military equipment was
counted by hand and many records existed only on paper, as von der Leyen told the
German parliament last November.
"We're in the middle of digitalizing a major
organization of a quarter million people," she said, stressing that
"to manage such a task, you need the outside view of things" and that
every German government ministry uses external consultants.
Eager to reform the apparatus, von der Leyen — a longtime
ally of Chancellor Angela Merkel who had already spent eight years leading two
other ministries — discharged the official who oversaw procurement and
announced that external advisers would now be involved in overseeing
significant projects.
The Berlaymont building, EUropean Commission headquarters in
Brussels | Mark Renders/Getty Images
She also hired a consortium of consultants including
consultancy KPMG to analyze flagship procurement projects. Their report
portrayed a dysfunctional organization, describing some ministry officials as
overwhelmed and highlighting procurement contracts that heavily favored the
interests of Germany’s arms industry.
Von der Leyen kicked off a far-reaching restructuring
process. That gained her respect among some soldiers — but didn't make her lots
of friends in other parts of the military, her ministry and industry, according
to officials working under her at the time.
The key players
Such reforms of Germany's crisis-ridden armed forces might
have been overdue — but the way von der Leyen approached the process allowed
external consultancies to gain influence in the ministry and the military,
according to several members of the Bundestag's investigative committee.
In the summer of 2014, von der Leyen announced that Katrin
Suder, a successful business consultant, would join the ministry in the
powerful position of armaments state secretary, overseeing billions of euros in
procurement spending and reporting directly to the minister.
The idea behind bringing in Suder — a physicist with a
doctorate in computational neuroscience who had spent 14 years climbing the
ranks at McKinsey — was to make processes more efficient and to have someone
with high-level corporate experience who could go toe-to-toe with arms industry
executives.
But the hiring also set off a process that helped external
advisers increase their influence, members of the Bundestag’s committee said.
Over the years that followed, contracts were awarded to
several consultancies. No company, however, has been under as much scrutiny by
lawmakers as global consultancy Accenture.
Von der Leyen's ministry has been little help in shedding
light on the affair, multiple investigative committee members said.
Much attention has focused on the role of Timo Noetzel, a
managing director at Accenture and a friend of Suder. The two have known each
other since they were colleagues at McKinsey, Noetzel told MPs in June — a fact
they had always "been open about," he said.
And Suder wasn't Noetzel's only personal contact at the
ministry. He described Erhard Bühler — a general who, as then-head of the
ministry's planning department, helped push for Accenture to be involved in the
PLM project — as his “mentor.” Bühler, who is now commander of NATO's Allied
Joint Force Command Brunssum, is also the godfather of Noetzel's children.
Bühler has said that his personal connection to Noetzel
played no role in his professional decisions. But some members of the
investigative committee say they are convinced such and similar "buddy
networks" helped Accenture and other consultancies land contracts.
Referring to the PLM project, which was covered under an IT
umbrella contract, the SPD's Rohde said that Bühler and two other department
leaders in the ministry "wanted Accenture to get the job, and that's why
they impeded competition and initiated a breach of the law."
Bühler and other ministry officials rejected such
accusations in their testimony to MPs. When it comes to the PLM project, for
example, Accenture had been the ministry's first choice because of the
company's experience in the field, Bühler said.
Accenture did not reply to a request for an interview.
Within four years of von der Leyen taking over at the
ministry, Accenture's earnings from work with Germany’s armed forces rose from
€459,000 in 2014 to around €20 million in 2018, according to Spiegel magazine.
An investigation 'full of gaps'
Von der Leyen's ministry has been little help in shedding
light on the affair, multiple investigative committee members said.
An internal investigation, which began after the auditors'
reports were leaked and was overseen by the ministry’s legal chief Andreas
Conradi, was "superficial, full of gaps, contradictory and not sufficient
to tackle problems of this scale," two SPD members of the investigative
committee wrote to von der Leyen in a letter dated June 21, 2019, seen by
POLITICO.
The committee's next job will be to find out how much von
der Leyen knew about possible misconduct by officials working under her |
Tobias Schwarz/AFP via Getty Images
“We will have to look at the question of why the internal
investigation of the ministry was so sloppy, and if that was intentional, which
I suspect it was, then whether the aim was to produce an investigative report
that would somehow calm down parliament but ideally not reveal anything,"
said Lindner of the Greens.
His party has joined forces with other opposition parties
and the Social Democrats to call for removing Conradi from the post of the
ministry's attorney of record, which allows him to attend all sessions of the
committee.
Henning Otte, the spokesperson for von der Leyen's
conservative bloc on the investigative committee, declined to be interviewed
for this article. He has previously expressed a markedly different view from
members of other parties on the ministry's efforts to get to the bottom of the
affair, offering praise for "thorough and comprehensive" cooperation
with parliament.
Von der Leyen’s role
The committee's next job will be to find out how much von
der Leyen knew about possible misconduct by officials working under her.
Lawmakers will continue to subpoena and question key witnesses until the end of
the year, including von der Leyen and her former undersecretary Suder, who
resigned from her post last year.
At this point, it remains unclear whether von der Leyen was
involved in setting up the technical details of contracts with consultants, or
how much knowledge she had of the cases now being investigated.
"The fact is that so far neither the internal
investigation nor the behavior of her ministry have reflected any great
commitment to clear up this matter," said the SPD's Rohde. "That's
why we will summon von der Leyen ... even if she becomes EU Commission
president."
Höhn of the socialist Die Linke party added that it is
"grotesque that so far, there hasn't been any disciplinary action — not
just at leadership level, but anywhere at all."
"That's a glaring failure of leadership, all the way to
the very top, because it sends a signal to the ministry that it doesn't matter
at all if you stick to the rules or don't — it won't have any consequences
either way," he said.
Von der Leyen, facing make-or-break vote, makes promises to
Parliament
German nominee for European Commission presidency puts
pledges in writing.
By DAVID M. HERSZENHORN 7/15/19, 11:16 AM CET Updated
7/15/19, 12:00 PM CET
It's Christmas in July for the European Parliament.
With Ursula von der Leyen facing a too-close-to-call
confirmation vote Tuesday on her nomination for European Commission president,
the conservative German defense minister responded to demands by the liberal
and socialist groups in Parliament on Monday by offering up an array of
goodies. These included such crowd-pleasers as the right of legislative
initiative for Parliament, which has long complained that it lacked such
authority, as well as her agreement to convene a two-year long "Conference
on the Future of Europe" that would give citizens a forum to express their
views.
In her written responses to demands issued following her
meetings with the political groups last week, von der Leyen reiterated her
commitment "to improve" the Spitzenkandidat, or lead candidate
system, which was effectively killed when the European Council nominated her
for the EU's top job.
Von der Leyen also tried to walk a tightrope regarding a
demand by liberals that their candidate for Commission president, Margrethe
Vestager, have a title equal to the socialist candidate, Frans Timmermans, who
is currently the Commission first vice president. Von der Leyen had told
socialists that Timmermans would retain that rank, angering the liberals.
"The Commission leadership team consists of the
President and two executive vice-Presidents," von der Leyen wrote.
"One of the two, the First Vice-President will replace the President in
her absence."
In her letters, the conservative nominee notably did not
address concerns raised about allegations of misspending and mismanagement at
the German defense ministry during her tenure there.
It was a move that seemed less Solomonic than a creative
child-custody arrangement, and she did not specify who would be the first vice
president. But it was an answer, in any event, to an issue that the leader of
the liberal-centrist Renew Europe group, Romanian MEP Dacian Cioloș, had
characterized as a potential deal-breaker for his members.
In her letters, von der Leyen suggested she had a very busy
weekend and said she had "prepared detailed Political Guidelines for the
next European Commission" that "cover the entire range of policies
which the European Union will have to work on" and said she would provide
a copy to MEPs in writing on Tuesday morning.
Her letter to the socialist group, the Progressive Alliance
of Socialists and Democrats (S&D), was broadly similar to the one sent to
Renew Europe. But it included some points that responded to specific demands
from the center-left. For instance, von der Leyen said she was committed to
opening negotiations with Albania and North Macedonia about future membership
in the EU — a step that some EU leaders, including French President Emmanuel
Macron and Dutch Prime Minister Mark Rutte, have resisted so far.
Von der Leyen also promised the socialists that she would
try to end the EU’s longstanding policy feud over migration and asylum rules.
“I will propose New Pact on Migration and Asylum,” she wrote, adding: “We need
a new way of burden sharing. We need a fresh start.”
In her letters, the conservative nominee notably did not
address concerns raised about allegations of misspending and mismanagement at
the German defense ministry during her tenure there. But von der Leyen will
have a chance to address those issues and others during a speech at the start
of the Parliament’s debate on her nomination Tuesday morning in Strasbourg.
The vote on her nomination is scheduled for 6 p.m. Tuesday.
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